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Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Occurs when LRAC is constant over a variety of plant sizes
Constant Returns to Scale
Price elastic demand
Allocative Efficiency
Substitute Goods
2. The difference between total revenue and total explicit and implicit costs
Long Run
Economic Profit
Break-even Point
Monopoly long-run equilibrium
3. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Economies of Scale
Luxury
Substitution Effect
4. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Perfectly elastic
Complementary Goods
Income Effect
Constrained Utility Maximization
5. The price of a good measured in units of currency
Perfectly inelastic
Resources
Absolute prices
Constrained Utility Maximization
6. Total product divided by labor employed. APL = TPL/L
Scarcity
Natural Monopoly
Market Equilibrium
Average Product of Labor (APL)
7. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Relative Prices
Total Fixed Costs (TFC)
Spillover costs
8. Ei > 1
Luxury
Excess Capacity
Variable inputs
Determinants of Demand
9. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Determinants of Supply
Monopolistic competition
Incidence of Tax
Total Fixed Costs (TFC)
10. Entry of new firms shifts the cost curves for all firms upward
Total Revenue
Monopolistic competition
Constant cost industry
Increasing Cost Industry
11. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Oligopoly
Absolute prices
Comparative Advantage
12. A good for which higher income increases demand
Normal Goods
Average Fixed Cost (AFC)
Price elastic demand
Producer surplus
13. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Luxury
Negative externality
Market Equilibrium
Decreasing Cost industry
14. The difference between total revenue and total explicit costs
Economies of Scale
Accounting Profit
Income Elasticity
Subsidy
15. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Marginal Resource Cost (MRC)
Economic Growth
Marginal Benefit (MB)
Total Revenue Test
16. The mechanism for combining production resources - with existing technology - into finished goods and services
Production function
Explicit costs
Necessity
Profit Maximizing Resource Employment
17. AVC = TVC/Q
Marginal Product of Labor (MPL)
Perfectly elastic
Average Variable Cost (AVC)
Price discrimination
18. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Non-collusive oligopoly
Determinants of Demand
Accounting Profit
Normal Profit
19. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Law of Supply
Price discrimination
Complementary Goods
20. Models where firms agree to mutually improve their situation
Cartel
Collusive oligopoly
Monopoly long-run equilibrium
Total Revenue Test
21. ATC = TC/Q = AFC + AVC
Collusive oligopoly
Cartel
Average Total Cost (ATC)
Normal Goods
22. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Price floor
Natural Monopoly
Demand for Labor
Subsidy
23. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Scarcity
Cartel
Economies of Scale
Fixed inputs
24. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Opportunity Cost
Market power
Law of Supply
25. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Price floor
Negative externality
Positive externality
26. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Determinants of Supply
Oligopoly
Implicit costs
Price elastic demand
27. The sum of consumer surplus and producer surplus
Increasing Cost Industry
Public goods
Total Welfare
Excise Tax
28. Es = (%dQs) / (%dPrice)
Variable inputs
Price Elasticity of Supply
Marginal Analysis
Determinants of Supply
29. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Monopoly
Monopolistic competition
Surplus
Monopolistic competition long-run equilibrium
30. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Price Ceiling
Producer surplus
Total Fixed Costs (TFC)
Resources
31. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Marginal Productivity Theory
Average Fixed Cost (AFC)
Price floor
Shortage
32. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal tax rate
Price Elasticity of Supply
Perfect competition
Subsidy
33. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Marginal Productivity Theory
Market power
Marginal Revenue Product (MRP)
Unit elastic demand
34. Entry of new firms shifts the cost curves for all firms downward
Complementary Goods
Decreasing Cost industry
Marginal Revenue Product (MRP)
Economies of Scale
35. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Collusive oligopoly
Monopolistic competition long-run equilibrium
Price Ceiling
Break-even Point
36. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Accounting Profit
Normal Profit
Demand for Labor
Shortage
37. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient
Average Total Cost (ATC)
Productive Efficiency
Economies of Scale
Surplus
38. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Perfect competition
Determinants of elasticity
Total Welfare
Free-Rider Problem
39. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Total Fixed Costs (TFC)
Total variable costs (TVC)
Determinants of Labor Demand
40. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Absolute prices
Subsidy
Perfectly elastic
41. Exists if a producer can produce more of a good than all other producers
Absolute Advantage
Scarcity
Production function
Price elastic demand
42. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Resources
Spillover benefits
Production function
Absolute Advantage
43. TR = P * Qd
Increasing Cost Industry
Utility Maximizing Rule
Total Revenue
Average Variable Cost (AVC)
44. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Allocative Efficiency
Dead Weight Loss
Derived Demand
Implicit costs
45. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Negative externality
Resources
Subsidy
Normal Profit
46. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Welfare
Determinants of Labor Demand
Total Revenue Test
Determinants of elasticity
47. The rational decision maker chooses an action if MB = MC
Marginal Analysis
Total Product of Labor (TPL)
Spillover benefits
Monopolistic competition
48. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Subsidy
Opportunity Cost
Consumer surplus
Total Fixed Costs (TFC)
49. Ed = (%dQd)/(%dP). Ignore negative sign
Law of Supply
Profit Maximizing Rule
Allocative Efficiency
Price elasticity
50. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Price Ceiling
Determinants of Demand
Substitute Goods
Dead Weight Loss